On Aug. 24, President Biden announced a plan for student loan debt relief. The three-part plan may affect nearly 8 million borrowers.
Part one will allow $20,000 of debt forgiveness for taxpayers who went to college on a Pell Grant or $10,000 without a Pell Grant. This applies only to taxpayers earning below $125,000 a year ($250,000 for married couples). The plan doesn’t specify how earnings are calculated or to which tax year they apply.
Part two is an extension of the pause on student loan repayment until Dec. 31, 2022.
Part three modifies the income-based repayment plan rules. Pell Grant recipients with undergraduate degrees will have their repayments capped at 5% of monthly income.
Contact one of our experts if you have any questions.